Gov. Henry McMaster on Monday proposed $162 million in income tax cuts as the first step in a five-year plan to reduce taxes by $2.2 billion.

In a letter introducing his first proposed budget, McMaster noted that South Carolina has the highest income tax rate of all states in the southeast and 12th highest in the nation.

"We must move quickly to maintain our state’s superior ability to attract new jobs, capital investment, and economic opportunity," he wrote. "The time has come to remove the burden of our high income tax rate."

McMaster wants to reduce each of the state's five tax brackets by 1 percent over five years.

His proposed budget for the fiscal year starting July 1 calls for nearly $140 million in tax savings, as well as an additional $22 million in tax exemptions for retired veterans, firefighters and law enforcement officers.

"We can do this without cutting government services," said the Republican governor, who replaced former Gov. Nikki Haley in January when she became U.S. ambassador to the United Nations.

Under his proposal, the state's general fund budget would grow to $8.06 billion, an increase of $113.8 million, or 1.4 percent, over the current spending plan.

Rep. Brian White, a Republican from Anderson who is chairman of the budget-writing House Ways and Means Committee, discussed the legislative session that begins Tuesday during a speech to the 1st Monday Club of Anderson.

"It is going to be quite an interesting year," said White, who made no mention of the tax cuts that McMaster proposed Monday afternoon.

White said lawmakers will need to come up with extra money for the state's pension plan and to cover rising health insurance costs.

McMaster's proposed budget includes an added $32.4 million to cover a 1 percent increase in employer contribution rates for state employees as part of the pension plan. His budget also sets aside $59 million to offset increased health insurance costs for state employees. Those employees would see their monthly premiums rise by $11.92 and their yearly deductible would go up $50.

Other highlights of McMaster's proposed budget include:

Nearly $111 million in additional funding for education, including $5 million for a school safety program, $5 million for school bus leasing and $500,000 for Clemson University’s Call Me MISTER teacher retention and recruitment program.

$44 million in increases for economic development and workforce training.

A $20 million contribution for a new state forensics lab.

$14 million for statewide voting machine replacement and maintenance.

$10 million for opioid response efforts

$2 million in renovations at the Richard M. Campbell Veterans Nursing Home in Anderson County.

Follow Kirk Brown on Twitter @KirkBrown_AIM and email him at kirkbrown@independentmail.com